Author: Zhao Ying
Source: Wall Street News
Artificial intelligence is becoming the core narrative of a new wave of layoffs in the crypto and fintech industry. Coinbase, PayPal, Gemini, and Crypto.com have all cut jobs, citing automation and efficiency improvements as the main drivers. However, critics point out that some companies may be using AI as a guise to mask the real costs of business decline and over-expansion.
According to a Bloomberg report, Coinbase CEO Brian Armstrong set a tough tone for the layoffs this Tuesday, warning that "the biggest risk right now is not taking action" and stating the company is committed to becoming a "lean, fast, AI-native" organization. This statement marks a new high in crypto industry executives publicly pushing the narrative of AI-driven restructuring.
The immediate market impact of this layoff wave is: the hiring logic of crypto and fintech companies is being reconfigured, technology and operational roles face continued compression, and the flattening of management hierarchies is accelerating. Investors need to judge whether this is a precursor to a leap in industry efficiency or a cyclical contraction packaged with AI.
Block Takes the Lead, Industry Follows
According to Bloomberg, the momentum of this layoff wave accelerated significantly after Block Inc. announced major job cuts. Block, the parent company of Square and Cash App, announced significant layoffs earlier this year, listing AI as part of a broader restructuring plan. Subsequently, several peer companies adopted similar rhetoric, characterizing the layoffs as proactive preparation for an AI-driven future.
Coinbase has been particularly active in this process. In addition to cutting staff, the company is also compressing management layers, requiring managers to operate in a "player-coach" model, balancing execution and management duties. Blockchain infrastructure company 0G Labs stated that it has reduced its workforce by 25% after internal AI tools significantly boosted production efficiency.
'AI Whitewashing' Accusations Emerge
Critics are not fully convinced by the above narrative. Many companies simultaneously face more direct business pressures: crypto asset trading activity has noticeably cooled, digital asset prices remain below recent highs, and payment companies are struggling amid slowing growth and intensifying competition.
Some companies have their own internal difficulties. Block aggressively expanded during the pandemic boom, accumulating significant redundancy; PayPal is still in the midst of a comprehensive transformation led by new management. This context has fueled accusations of "AI whitewashing" — where companies use artificial intelligence as a more respectable justification for layoffs caused by weak demand or over-hiring.
Needham & Company analyst John Todaro bluntly questioned this: "Whenever I see these layoffs, and AI is listed as one of the reasons, I take a step back and ask: Have we seen this on companies where the market is on fire?" He added, "I'm not sure I believe the AI narrative."
Two Logics Coexist, the Ratio is Debated
Some observers believe both explanations can be true simultaneously. Raman Shalupau, founder of crypto recruitment platform CryptoJobsList, estimates that current layoffs are distributed "roughly 80/20 across the industry — with genuine AI efficiency gains accounting for 80% and cutting redundancy from the last bull market cycle accounting for 20%."
This assessment implies that substantive AI-driven restructuring of job roles is indeed happening, but its scale and pace vary by company. Even in companies not conducting large-scale layoffs, job functions are rapidly reorganizing around automation tools, with some repetitive work being replaced by systems rather than taken on by new hires.
